Supreme Court of India
ALKA KHANDU AVHAD versus AMAR SYAMPRASAD MISHRA & ANR. on 8 March 2021
[2021] 2 S.C.R. 633
ALKA KHANDU AVHAD
v.
AMAR SYAMPRASAD MISHRA & ANR.
(Criminal Appeal No.258 of 2021)
MARCH 08, 2021
[DR. DHANANJAYA Y. CHANDRACHUD ANDM. R. SHAH, JJ.]
Negotiable Instruments Act, 1881 – s.138 r/w S.141 –Complaint filed against appellant – High Court refused to quashthe same – On appeal, held: Dishonoured cheque was issued byoriginal accused no.1-husband of the appellant – It was drawn onhis bank account and was signed by him – Appellant-originalaccused no.2 was neither the signatory to the cheque nor thedishonoured cheque was drawn from her bank account – Accountin question was not a joint account – s.138 does not speak aboutthe joint liability – Even in case of a joint liability, in case ofindividual persons, a person other than a person who has drawnthe cheque on an account maintained by him, cannot be prosecutedfor offence u/s.138 – Appellant cannot be convicted with the aid ofs.141 either – High Court committed grave error in not quashingthe complaint against the appellant – Impugned judgment set aside– Complaint case filed by respondent no.1-original complainant isquashed.
Allowing the appeal, the Court
Held: 1.1 The dishonoured cheque was issued by originalaccused No. 1 – husband of the appellant. It was drawn from thebank account of original accused No. 1. The dishonoured chequewas signed by original accused No. 1. The appellant herein-original accused No. 2 is neither the signatory to the cheque northe dishonoured cheque was drawn from her bank account. Thatthe account in question was not a joint account. On a fair readingof Section 138 of the NI Act, before a person can be prosecuted,the following conditions are required to be satisfied: i) that thecheque is drawn by a person and on an account maintained byhim with a banker; ii) for the payment of any amount of money to
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Aanother person from out of that account for the discharge, in wholeor in part, of any debt or other liability; and iii) the said cheque isreturned by the bank unpaid, either because of the amount ofmoney standing to the credit of that account is insufficient tohonour the cheque or that it exceeds the amount arranged to bepaid from that account. Therefore, a person who is the signatoryBto the cheque and the cheque is drawn by that person on anaccount maintained by him and the cheque has been issued forthe discharge, in whole or in part, of any debt or other liabilityand the said cheque has been returned by the bank unpaid, suchperson can be said to have committed an offence. Section 138 ofCthe NI Act does not speak about the joint liability. Even in caseof a joint liability, in case of individual persons, a person otherthan a person who has drawn the cheque on an account maintainedby him, cannot be prosecuted for the offence under Section 138of the NI Act. A person might have been jointly liable to pay thedebt, but if such a person who might have been liable to pay theDdebt jointly, cannot be prosecuted unless the bank account isjointly maintained and that he was a signatory to the cheque. [Paras6,7][637-G-H; 638-A-G]
1.2 Section 141 of the NI Act is relating to the offence bycompanies and it cannot be made applicable to the individuals.ETwo private individuals cannot be said to be “other associationof individuals”. Therefore, there is no question of invoking Section141 of the NI Act against the appellant, as the liability is theindividual liability (may be a joint liabilities), but cannot be saidto be the offence committed by a company or by it corporate orFfirm or other associations of individuals. The appellant herein isneither a Director nor a partner in any firm who has issued thecheque. Therefore, even the appellant cannot be convicted withthe aid of Section 141 of the NI Act. Therefore, the High Courthas committed a grave error in not quashing the complaint againstthe appellant for the offence punishable under Section 138 r/wGSection 141 of the NI Act. The impugned judgment and orderdated 21.08.2019 passed by the High Court refusing to quashthe criminal complaint against the appellant for the offence punishable under Section 138 read with Section 141 of the NIAct is hereby quashed and set aside. The complaint case pendingin the Court of the learned Metropolitan Magistrate filed byrespondent No.1 – original complainant being C.C. No. 2802/SS/2016 is hereby quashed and set aside. [Paras 8, 8.1][639-A-F]
CRIMINAL APPELLATE JURISDICTION: CriminalAppeal No. 258 of 2021
From the Judgment and Order dated 21.08.2019 of the High Courtof Judicature at Bombay in Cr. Writ Petition No. 2595 of 2019.
Samarth S. Karmarkar, Jamnesh Kumar, Ms. SupriyankaKarmarkar, Himanshu Shekhar, Advs. for the Appellant.
Zulfiker Ali P. S, Adv. for the Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
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1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 21.08.2019 passed by the High Court of Judicature atBombay in Criminal Writ Petition No. 2595 of 2019, by which the HighCourt has dismissed the said application preferred by the appellant hereinunder Article 226 of the Constitution of India and has refused to quashthe complaint filed against the appellant for the offences punishable underSection 138 r/w Section 141 of the Negotiable Instruments Act, 1881(hereinafter referred to as the ‘NI Act’), the original accused No. 2 haspreferred the present appeal.
2. That respondent No. 1 herein has filed a criminal complaintagainst the appellant and her husband for the offences punishable underSection 138 r/w Section 141 of the NI Act in the Court of the learnedMetropolitan Magistrate, 43[rd] Court at Borivali, Mumbai, which has beennumbered as C.C. No. 2802/SS/2016. That respondent No. 1 – originalcomplaint (hereinafter referred to as ‘the original complainant’) is apracticing advocate and partner in a solicitor firm in Mumbai. As per thecase of the complainant, both the accused who are husband and wife,approached the original complaint in a legal matter. That the originalcomplainant assisted accused Nos. 1 and 2 in preparing replies and noticeof motion, conference, coordinating with counsel, filing Vakalatnamasand appearing through advocates’ office and also as counsel in SummarySuit. That the original complainant raised a professional bill for the legal A
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Awork done by him to represent accused Nos. 1 and 2 in the legalproceedings. That, thereafter, original accused No. 1 – husband of theappellant herein handed over to the complainant a post-dated chequedated 15.03.2016 bearing No.227050 drawn on Union Bank of India forRs.8,62,000/-. The said cheque was presented for encashment and thesame came to be returned unpaid with the endorsement “fundsBinsufficient”. That, thereafter, the original complainant served a legalnotice dated 21.05.2016 calling upon the accused to pay the amount ofRs.8,62,000/- within 15 days from the date of receipt of the said notice.That the said notice was duly served upon the accused, however, theaccused neither replied the said notice nor made the payment of theCaforesaid dishonoured cheque. Therefore, the complainant filed acomplaint against both the accused – husband and wife for the offencepunishable under Section 138 of the NI Act. That the learned MetropolitanMagistrate, 43[rd] Court, Borivali, Mumbai directed to issue process againstboth the accused for the offence punishable under Sections 138 r/wSection 141 of the NI Act.D
2.1 That, thereafter, the appellant herein – original accused No. 2,wife of the original accused No. 1 filed Criminal Writ Petition No. 2595of 2019 in the High Court to quash the criminal complaint filed againsther mainly on the ground that the appellant was neither a signatory tothe cheque dishonoured nor there was a joint bank account.E
2.2 It was further submitted that the appellant cannot be prosecutedfor the offence punishable under Sections 138 r/w Section 141 of the NIAct.
2.3 However, it was the case on behalf of the original complainantFthat it was the joint liability of both the accused Nos. 1 and 2 to pay theprofessional bill as the original complainant represented both the accusedand therefore considering Section 141 of the NI Act, the appellant herein– original accused No. 2 is also liable for the offence punishable underSection 138 r/w Section 141 of the NI Act.
G2.4 By the impugned judgment and order, the High Court hasrefused to quash the criminal complaint filed against the appellant, givingrise to the present appeal.
3. Learned counsel appearing on behalf of the appellant hasvehemently submitted that the dishonoured cheque was issued by herhusband and not the appellant and even the account in question was notH
a joint account and that the appellant was neither the signatory to thecheque nor the cheque was drawn from the bank account of the appellantand therefore the appellant cannot be prosecuted for the offencepunishable under Section 138 of the NI Act. It is vehemently submittedthat the ingredients of Section 138 of the NI Act are not satisfied, andtherefore, the High Court ought to have quashed the criminal complaintagainst the appellant.
3.1 It is further submitted by the learned counsel appearing onbehalf of the appellant that, in the facts and circumstances of the case,even Section 141 of the NI Act shall not be applicable as the chequewas issued by a private individual.
4. The present appeal is vehemently opposed by the learned counselappearing on behalf of respondent No. 1 – original complainant.
4.1 It is submitted that the liability to pay the debt towards theprofessional bill was the joint liability of both the accused as thecomplainant represented both the accused and, therefore, as rightlyobserved and held by the High Court, Section 141 of the NI Act shall beapplicable.
4.2 It is submitted that when the Trial Court issued the summonsagainst the appellant for the offence punishable under Section 138 r/wSection 141 of the NI Act after having come to the conclusion that aprima facie case has been made out, the High Court has rightly refusedto quash the criminal complaint.
4.3 It is further submitted that as the cheque was issued towardsdischarge of legal liability of both the accused and thereafter when herhusband issued the cheque, the High Court has rightly refused to quashthe complaint.
5. Learned counsel appearing on behalf of the State has supportedthe impugned judgment and order passed by the High Court.
6. We have heard learned counsel appearing on behalf of therespective parties at length, considered material on record and alsoconsidered the averments and allegations in the complaint. It emergesfrom the record that the dishonoured cheque was issued by originalaccused No. 1 – husband of the appellant. It was drawn from the bankaccount of original accused No. 1. The dishonoured cheque was signedby original accused No. 1. Therefore, the dishonoured cheque was signed AB
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Aby original accused No. 1 and it was drawn on the bank account oforiginal accused No. 1. The appellant herein-original accused No. 2 isneither the signatory to the cheque nor the dishonoured cheque wasdrawn from her bank account. That the account in question was not ajoint account. In the light of the aforesaid facts, it is required to beconsidered whether the appellant herein – original accused No. 2 can beBprosecuted for the offence punishable under Section 138 r/w Section141 of the NI Act?
7. On a fair reading of Section 138 of the NI Act, before a personcan be prosecuted, the following conditions are required to be satisfied:
Ci) that the cheque is drawn by a person and on an accountmaintained by him with a banker;
ii) for the payment of any amount of money to another personfrom out of that account for the discharge, in whole or in part, of anydebt or other liability; andDiii) the said cheque is returned by the bank unpaid, either becauseof the amount of money standing to the credit of that account is insufficientto honour the cheque or that it exceeds the amount arranged to be paidfrom that account.
Therefore, a person who is the signatory to the cheque and theEcheque is drawn by that person on an account maintained by him andthe cheque has been issued for the discharge, in whole or in part, of anydebt or other liability and the said cheque has been returned by the bankunpaid, such person can be said to have committed an offence. Section138 of the NI Act does not speak about the joint liability. Even in case ofFa joint liability, in case of individual persons, a person other than a personwho has drawn the cheque on an account maintained by him, cannot beprosecuted for the offence under Section 138 of the NI Act. A personmight have been jointly liable to pay the debt, but if such a person whomight have been liable to pay the debt jointly, cannot be prosecuted unlessthe bank account is jointly maintained and that he was a signatory to theGcheque.
8. Now, so far as the case on behalf of the original complainantthat the appellant herein – original accused No. 2 can be convicted withthe aid of Section 141 of the NI Act is concerned, the aforesaid has nosubstance.
8.1 Section 141 of the NI Act is relating to the offence bycompanies and it cannot be made applicable to the individuals. Learnedcounsel appearing on behalf of the original complainant has submittedthat “Company” means any body corporate and includes, a firm or otherassociation of individuals and therefore in case of a joint liability oftwo or more persons it will fall within “other association of individuals”and therefore with the aid of Section 141 of the NI Act, the appellantwho is jointly liable to pay the debt, can be prosecuted. The aforesaidcannot be accepted. Two private individuals cannot be said to be “otherassociation of individuals”. Therefore, there is no question of invokingSection 141 of the NI Act against the appellant, as the liability is theindividual liability (may be a joint liabilities), but cannot be said to be theoffence committed by a company or by it corporate or firm or otherassociations of individuals. The appellant herein is neither a Director nora partner in any firm who has issued the cheque. Therefore, even theappellant cannot be convicted with the aid of Section 141 of the NI Act.Therefore, the High Court has committed a grave error in not quashingthe complaint against the appellant for the offence punishable underSection 138 r/w Section 141 of the NI Act. The criminal complaint filedagainst the appellant for the offence punishable under Section 138 r/wSection 141 of the NI Act, therefore, can be said to be abuse of processof law and therefore the same is required to be quashed and set aside.
In view of the above and for the reasons stated above, the presentappeal succeeds. The impugned judgment and order dated 21.08.2019passed by the High Court in Criminal Writ Petition No. 2595 of 2019refusing to quash the criminal complaint against the appellant for theoffence punishable under Section 138 read with Section 141 of theNI Act is hereby quashed and set aside. The complaint case pending inthe Court of the learned Metropolitan Magistrate filed by respondentNo. 1 – original complainant being C.C. No. 2802/SS/2016 is herebyquashed and set aside. The appeal is allowed accordingly.
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